One way to help solve the agency problem – to help managers make decisions that are in shareholders’ best interests is to relate the managers’ personal wealth to shareholder value. Some firms tie managerial compensation to stock performance, often by awarding managers stock options as part of their compensation. The options allow managers to purchase, at a future time, a stated number of the firm’s shares at a specific price. If the firm’s stock price rises, the value of the shares, and therefore the managers’ wealth, also rises. Decisions that detract from the best interest of shareholders will affect management by making the stock options less valuable. More and more firms are basing the compensation of their top managers on the firm’s stock price.